Payroll Cost Calculator (Employer-Side)
Compute the fully-loaded cost of a US employee: salary plus employer Social Security, Medicare, FUTA, your own SUTA and workers comp rates, health cover, 401(k) match and other benefits. 2025 or 2026. Free.
Payroll Cost Calculator
Computes what one US employee costs the employer in a year: gross salary, the employer's Social Security and Medicare, federal unemployment tax (FUTA), your state unemployment tax (SUTA), workers' compensation, health cover, 401(k) match and other benefits. The federal figures are fixed by law; SUTA, workers' comp and benefits are your own numbers — the defaults are placeholders to replace.
From your state's annual rate notice. New employers are assigned a rate until they build a claims history.
Each state sets its own; the default is the federal FUTA base, not your state's figure.
0 unless your state owes the federal unemployment fund. For 2025: California 1.2%, U.S. Virgin Islands 4.5%.
Your policy's rate per USD 100 of payroll for this job's class code is the same number as a percentage.
Default: KFF's 2025 average employer share for single cover.
How to Use the Payroll Cost Calculator
Enter your state's SUTA rate and wage base
State unemployment tax is the one payroll tax with no national figure: each state sets the taxable wage base, and assigns each employer a rate from its own layoff history. A new employer gets the state's new-employer rate. Both numbers are on the rate notice your state unemployment agency sends each year, and payroll providers show them too. The defaults (3% on USD 7,000) are placeholders, not an average.
Get the workers' comp rate from your policy
Insurers price workers' compensation per USD 100 of payroll, by job classification code and state, so a desk job and a roofing job at the same company carry very different rates. A rate of 0.85 per USD 100 is 0.85% here. Coverage is compulsory for most employers in most states; in Texas private employers can choose not to carry it (Texas Department of Insurance), at the price of losing the limit on their liability if an injured employee sues.
Use what YOU pay for health cover
Enter the employer share, not the premium. In KFF's 2025 Employer Health Benefits Survey the average premium was USD 9,325 for single cover and USD 26,993 for family cover, of which workers paid USD 1,440 and USD 6,850 — leaving employers about USD 7,885 and USD 20,143. Your broker's quote is the better figure.
Read the multiplier against your own inputs
The multiplier is total cost divided by salary. It moves with the benefits you entered far more than with tax: at the default inputs the federal payroll taxes are about 7.7% of salary, while health cover alone is over 9%. Compare an employee and a contractor on the same footing — a contractor's invoice already carries their own self-employment tax and overheads.
Fully-Loaded Cost — What a Salary Costs Once the Employer's Share Is Added
Three layers on top of the salary
The salary in the offer letter is the smallest number an employer can budget with. On top of it sit three layers. The first is fixed by federal law and identical in every state: 6.2% Social Security on wages up to the wage base, 1.45% Medicare on every dollar, and FUTA, which is 6.0% of the first USD 7,000 less a credit of up to 5.4% for paying state unemployment tax on time — 0.6%, or USD 42 a year per employee, in most states. The second is set by the state and by your own history: SUTA and workers' compensation. The third is a choice: health cover, retirement match and other benefits.
With the defaults on this page — a USD 85,000 salary, a placeholder 3% SUTA on USD 7,000, 1% workers' comp, KFF's average single-cover employer share, a 4% match and USD 1,500 of other benefits — the employee costs USD 105,390 a year, 1.24 times the salary. Change the benefits and the answer moves most; change the federal taxes and it barely can.
Where the federal taxes stop
Social Security stops at the wage base: USD 184,500 of wages in 2026 (it was USD 176,100 in 2025), so the employer's share is capped at USD 11,439 per employee in 2026 however high the salary. Medicare has no cap. Above USD 200,000 of wages the employer must also withhold a 0.9% Additional Medicare Tax from the employee, but that tax is the employee's alone and never adds to employer cost. FUTA stops after the first USD 7,000. That is why the multiplier for a highly paid employee is driven almost entirely by benefits.
"Additional Medicare Tax is only imposed on the employee. There is no employer share of Additional Medicare Tax." — IRS Publication 15 (2026), Circular E, Employer's Tax Guide
Credit reduction states
A state that has borrowed from the federal government to pay unemployment benefits and not repaid it becomes a credit reduction state, and its employers lose part of the 5.4% FUTA credit. For 2025 the U.S. Department of Labor named California (1.2%) and the U.S. Virgin Islands (4.5%), per Schedule A (Form 940) for 2025: a California employer pays 1.8% of the first USD 7,000 rather than 0.6%. The extra is settled with the fourth-quarter deposit. The 2026 list is announced in November; enter your state's reduction in the calculator if it has one.
1099 contractor vs W-2 employee
A contractor's invoice is the whole cost to the business: no employer Social Security or Medicare, no FUTA or SUTA, no benefits. Comparing a contractor's rate with an employee's salary is therefore comparing two different things; compare it with the fully-loaded figure above instead. Classification is not a free choice either. The IRS and state agencies look at the substance of the relationship — who controls the hours, the methods and the tools — and an employee paid as a contractor leaves the business owing the payroll taxes it skipped, with penalties.
Social Security stops at the wage base; Medicare and benefits never do
Employer Social Security: 6.2% of wages up to USD 184,500 in 2026, so at most USD 11,439 per employee (IRS Publication 15).
Employer Medicare: 1.45% of every dollar of wages, with no wage base.
The 0.9% Additional Medicare Tax above USD 200,000 is withheld from the employee; there is no employer share.
FUTA: 6.0% of the first USD 7,000, less up to 5.4% credit for state unemployment tax paid on time — usually USD 42 per employee a year.
Credit reduction: for 2025 California employers lost 1.2% of the FUTA credit and U.S. Virgin Islands employers 4.5%.
SUTA has no national rate or wage base. Both come from your state, and your rate from your own layoff history.
KFF 2025: average premiums of USD 9,325 single and USD 26,993 family, of which workers paid USD 1,440 and USD 6,850.
Texas lets most private employers choose whether to carry workers' compensation; those that opt out must report it to the state.
The wage base rises every year: it was USD 176,100 for 2025 and is USD 184,500 for 2026, so the same salary above the line costs the employer USD 520.80 more in Social Security.
On family cover the employer's share is far larger: about USD 20,143 of KFF's 2025 average family premium, against USD 7,885 for single cover.
Frequently Asked Questions
- Each layer adds to the salary: employer Social Security and Medicare (7.65% of wages up to the wage base), FUTA (usually USD 42), your SUTA and workers' comp, then whatever benefits you offer. The federal part is fixed; the rest is yours, which is why the calculator asks for it rather than assuming an industry average. Health cover is usually the biggest single item after the salary itself.
- Federal Insurance Contributions Act — funds Social Security + Medicare. Employer pays 6.2% Social Security (capped at the USD 184,500 wage base in 2026; it was USD 176,100 in 2025) + 1.45% Medicare (uncapped). The employee pays the same 7.65%, withheld from pay, plus the 0.9% Additional Medicare Tax on wages above USD 200,000, which the employer withholds but does not match. Self-employed people pay both halves as self-employment tax.
- State-regulated insurance covering employee injuries on the job. The premium is a rate per USD 100 of payroll for each job classification code, set by state and insurer and adjusted for your own claims record. Most states require employers to carry it; Texas lets most private employers opt out, who then lose the liability protection the policy gives. Your policy's declarations page shows the class codes and rates.
- 1099 contractor: no payroll taxes, no benefits, no workers' comp on your side — suited to defined projects, fluctuating workloads and genuinely independent specialists. W-2 employee: continuity, control over how the work is done, and the cost this calculator shows. The choice is constrained by law: the IRS common-law test and stricter state tests such as California's ABC test decide which a worker is, whatever the contract says, and misclassification leaves the employer owing back taxes and penalties.
- The federal taxes are the same everywhere, so the state differences come from three places: the SUTA rate and wage base, workers' compensation rates, and state-mandated programmes such as paid family leave or disability insurance (some funded by employees, some shared). Enter your own state's figures for the first two; the third is outside this calculator. A credit reduction state also adds to FUTA.
- Payroll services typically charge a monthly base fee plus a fee per employee, and prices change often, so check the providers' own pricing pages rather than a figure quoted here. Add the per-employee share to "Other benefits" if you want it in the total. Whoever runs payroll, the employer remains responsible for depositing the withheld and employer taxes on time.
- Yes — the employer's share is a deductible business expense. A Section 125 premium-only plan lets employees pay their share from pre-tax pay, which also takes it out of Social Security and Medicare wages, lowering FICA on both sides. S-corporation shareholders owning more than 2% follow different rules; ask a small-business CPA.
- This calculator gives the recurring annual cost. A first year also carries one-off costs: recruiting (an agency fee is usually a percentage of first-year salary), equipment and software, and the weeks before a new hire is fully productive. Price those from your own quotes and add them to the first year's budget separately.
- Varies widely. CA: state disability insurance, paid family leave, mandatory sick leave. NY: paid family leave, NYC ESSTA sick + safe leave. MA: paid family + medical leave. WA: paid family + medical leave. CO: paid family + medical leave. NJ: paid family leave. Most are funded by payroll contributions, some paid by the employee and some shared, at rates each state resets periodically. Check your state labour department's site or your payroll provider's state compliance settings.
- Checklist: (1) EIN from the IRS. (2) State employer registration (unemployment agency + state revenue department). (3) Workers' comp policy (required in most states). (4) Payroll provider or software. (5) Form W-4 + I-9 from the employee. (6) New-hire reporting to the state. (7) Federal and state workplace posters. (8) Health insurance if you offer it — the federal employer mandate applies only from 50 full-time-equivalent employees. SCORE and the SBA offer free guidance through these steps.
Method & sources
How it computes
Cost = salary + employer Social Security (6.2% to the wage base: 184,500 in 2026, 176,100 in 2025) + Medicare (1.45%, uncapped) + FUTA (6.0% of the first 7,000 less up to 5.4% credit, less any credit reduction) + SUTA (your rate on your state's wage base) + workers' comp + health, 401(k) match and other benefits. Each line in whole cents; the employee-only 0.9% Additional Medicare Tax is excluded (USTaxKernel).
What this tool implements
- Federal figures from IRS Publication 15 (2026): Social Security 6.2% each for employer and employee on wages up to the wage base (184,500 for 2026; 176,100 for 2025, Table 3); Medicare 1.45% each with no wage base; FUTA 6.0% on the first 7,000 of each employee's wages, with a credit of up to 5.4% for state unemployment tax paid in full and on time (0.6% net).
- Additional Medicare Tax (0.9% of wages above 200,000) is withheld from the employee and never added to employer cost: Publication 15 says it "is only imposed on the employee. There is no employer share."
- FUTA credit reduction is an input. For 2025 the reduction was 1.2% in California and 4.5% in the U.S. Virgin Islands (Schedule A, Form 940); the 2026 list is announced in November 2026 and the page says so.
- SUTA rate and taxable wage base, workers' compensation rate and benefits are the employer's own figures and are inputs, never national constants; the defaults are labelled as placeholders. The health default is KFF's 2025 average employer share for single cover (premium 9,325 less worker contribution 1,440).
- Every line item is computed in whole cents with one rounding per line; total = salary + employer taxes + benefits exactly.
- Corrected 2026-10-16: SUTA charged on a fixed 21,000 base for every state (now the employer's wage base); no FUTA credit reduction input (added); one year only (2025 added); health default from KFF 2024 (now 2025); unsourced multiplier benchmarks, state comparisons, payroll vendor prices, an uncited Vanguard figure and the claim that Texas is the only state without mandatory workers' comp removed or rewritten from the Texas Department of Insurance.
Sources
- Internal Revenue Service. Publication 15 (2026), (Circular E), Employer's Tax Guide — Social Security and Medicare rates and wage base, Additional Medicare Tax, FUTA. https://www.irs.gov/publications/p15
- Internal Revenue Service. Schedule A (Form 940) for 2025 — Multi-State Employer and Credit Reduction Information (California 0.012, U.S. Virgin Islands 0.045). https://www.irs.gov/pub/irs-pdf/f940sa.pdf
- Internal Revenue Service. Instructions for Form 940 (2025) — credit reduction states. https://www.irs.gov/instructions/i940
- Internal Revenue Service. Topic no. 560, Additional Medicare Tax — thresholds by filing status. https://www.irs.gov/taxtopics/tc560
- KFF. 2025 Employer Health Benefits Survey — average premiums 9,325 single / 26,993 family; average worker contributions 1,440 / 6,850. https://www.kff.org/health-costs/2025-employer-health-benefits-su…
- Texas Department of Insurance, Division of Workers' Compensation. Employer resources — private employers may choose whether to carry coverage. https://www.tdi.texas.gov/wc/employer/index.html
What can make this go out of date
- The KFF health-cost default is one survey year; KFF publishes a new survey each autumn.
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